Renter’s Hell

Portlanders pay a steep price in the nation’s toughest rental market.

SOURCE: U.S. Bureau of Labor Statistics and the Metro Multifamily Housing Association

Landlords say they need to do very little now to attract
tenants. Nina Lyski—the building manager for Jeanne Manor, a historic
67-unit building in the South Park Blocks owned by KBC Management—says
there are 15 people on a waiting list.

“I rented about eight apartments last year sight unseen,” she says.

Nancy Swann, who runs
the complaint hotline for the Community Alliance of Tenants, says most
of the criteria landlords use to reject tenants aren’t new: Credit
history, rental history, pet ownership and employment have been
application questions for years.

The difference today
is that landlords can afford to be picky. The slightest blemish on a
credit history can doom a would-be renter’s chances.

Swann says landlords
who in the past have been willing to work through problems with tenants
are far less inclined to do so in this market.

She has heard
complaints from people who lost their jobs and whose landlords refused
to wait for the tenants’ unemployment benefits to start before evicting
them.

“A lot of landlords are like, ‘Pay the rent or get out,’” Swann says.

Developers say the economics of building
apartment complexes in Portland don’t pencil out right now, even with
rents climbing fast.

High-rise buildings
need higher rents to pay off their large upfront construction costs,
which tend to run higher per unit than the low-slung apartment buildings
outside the city’s core. There are only a few places in the city—the
Pearl District, for example—where landlords can demand especially high
rents, but some developers say not high enough.

Spencer Welton,
senior vice president of development for Simpson Housing LLLP, says
apartment towers like the 15-story building his company planned—and then
canceled—for the Pearl District can’t charge rents high enough to pay
for the project.

Welton says his
company, after looking at rents in similar-sized Pearl buildings,
planned to charge an average of $1,700 to $1,800 a month for a
one-bedroom unit.

It didn’t pencil out
to cover the $56 million project. “With the kind of construction we were
trying to do, the rents just didn’t support that,” he says.

Portland developer
Bob Ball says he can make a new Pearl District building work. He
recently announced plans for a six-story, white-brick apartment complex
called The Parker on Northwest 13th Avenue between Pettygrove and Quimby
streets, with a planned opening of 2013.

Ball
says the key is constructing a shorter building with slightly smaller
units, thus reducing the building costs while allowing him (he hopes) to
charge about the same rents Simpson considered.

“If you have the
right product and the right amount of land, I think the rents are there
to support it,” he says. “But if you’re building anything with many
stories, you’re going to have to have the rents to pay for it.”

Pearl District rents
are beyond the means of most Portlanders. Yet developers are not
building the low-slung apartment complexes that are cheaper on a
square-foot basis to develop and, in turn, rent for less money.

Tokola Properties’
Unti says the region’s available land for stick-built, horizontal,
suburban apartments has pretty much been used up, and the area’s
urban-growth boundary has limited where new construction can be built.

Unti also says banks
cut way back on lending for real-estate development, especially those
for apartments that charge mid- to low-range rents.

“In the past, I could
borrow about 85 to 90 percent of the cost to build a new apartment,” he
says. “Now, I can borrow about 60 percent. Everyone is more risk
sensitive, more risk averse.”

Unti says public-private partnerships, such as subsidies in urban-renewal areas, could help.

Fish says the city
has tried to find ways to help, but he admits it hasn’t been enough.
According to the Housing Bureau, the city since 2006 has paid $150
million to help add 4,500 units of affordable housing through
construction and aid to renters making down payments when they buy a
home.

Fish says the
subsidized units go to households that make 60 percent or less of
Portland’s median family income. That means a family of four that makes
less than $43,200 would qualify. A single person needs to make less than
$30,240.

Even with this
housing available, Fish says more than 50 percent of Portland renters
are “cost-burdened,” which means they pay more than 30 percent of their
monthly incomes on rent.

“On
paper, we’re doing a pretty good job, but the demand just keeps
growing,” Fish says. “We’re going to have an impact, but on the margins.
The market is going to provide the bulk of the housing.”

No one has a good answer for satisfying the demand.

“It’s absolutely true
we won’t be able to build our way out of our housing crisis,” says Mary
Li, Multnomah County community services director.

Li, who works with several programs designed to help people find housing, says she sees the shortage on a daily basis.

She says the city and
county provide financial help for people to rent, from short-term rent
assistance to cosigning leases if the renter has bad credit. But those
programs don’t address the rental shortage.

That means higher
rents—the only way developers will get the cash they need to qualify for
financing. And rents have already risen too high for the average
Portlander.

Elisa Harrigan, executive director of the Community Alliance of Tenants, says she’s already seeing the impact of high rents.

“We’re
seeing the burden be higher on tenants to maintain their housing,” she
says. “People’s incomes aren’t growing at the same rate as the rental
price, and government services are getting cut.

“Things were bad before, but they’re worse now.”

Bozanich hopes the city and developers figure it out.

“I know that
community is really important to Portland,” she says. “I hope we get to
keep living that way instead of being pushed out and separated.”

"In the low usage areas, we found that our vehicles sit idle four times longer, ultimately affecting overall vehicle availability for the Portland membership base, as well as parking for the Portland community."

News
East Portland can't catch a break.Just this week KGW had a story called, "Diverse, non-cool East Por... More